When facing a market slowdown, you may want to step on the gas instead of slamming the brakes to generate new leads.
“I like to compare it to a race car driver,” says Ryan Serhant, CEO of Serhant and star of Bravo’s “Million Dollar Listing New York.” “The best ones—the ones who win the race—are the ones who speed into the curve. They don’t slow down.”
To stay ahead of any market shift, some real estate professionals look to diversify their business, adding property management, home staging and other services to build additional income streams. Thomas Day, an agent with eXp Realty in Fort Lauderdale, Fla., knows the benefit of diversifying. He started in real estate in 2006 right before the housing market spiraled during the Great Recession. He discovered a foreclosure niche that allowed him to ride out the market upheaval and keep his business flowing with a steady stream of REO listings from banks.
Now, amid another downturn—though less severe—Day is offering to do more broker price opinions for asset managers and banks, and he’s reengaging with his contacts in the foreclosure niche in case there’s a sudden need for those services.
“I don’t think the direction of the market is what will determine an agent’s success or failure,” he says. “It’s going to be their perseverance and determination to sell real estate, as well as picking the right niche. Sales will still happen no matter what type of market we’re in. You just have to be in the right place at the right time.”
Creating New Pipelines of Business
If you want to diversify your business, pick one or two niches and explore them, Day suggests. YouTube videos, industry conferences and networking events, and diving into education can help you ramp up a new skill set. The National Association of REALTORS® has more than two dozen designations and certifications to help you gain additional training and skills.
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Jessica Larsen, a broker with Kismet Enterprises in Cape Cod, Mass., added short-term rentals—a niche she believes will remain healthy—to her business. She helps manage 300 properties across the country and uses a method that, she says, keeps agents away from “desk management” and focused on “owner management.” She uses channel marketing technology to automate and outsource many property management tasks, such as reservations and check-ins.
“Short-term rentals can be overwhelming,” she says. “But you can stay in that space by finding the right partnerships do you can keep your eyes on the market for your client.” She runs her own property management company, Five Star Vacation Rentals, and she’s even built offshoot companies like her own cleaning company, Cape Cod Cleaning, which serves her short-term rental guests.
Find the Right Niche for the Market
A slower market can be an opportunity to explore new avenues of business. Day, who has produced a video series on YouTube about different areas of focus in real estate, offers recession-proof niches, including:
- Divorce: Whether it’s a good or bad economy, divorces happen. And they typically entail the sale of a property.
- Probate or estate sales: When a property owner dies, the property often needs to be sold, usually by the heirs.
- Bankruptcy: Many properties, whether they have equity or not, have to be sold when the owner files for bankruptcy.
- Short sales: This is when property owners owe more on the home than it’s worth. The agent sells the home and negotiates with the lender to have the difference between the sale price and the owner’s mortgage balance forgiven. You should get educated on how the process works because it’s been a while since they’ve been a meaningful part of the market, Day says.
- Investment properties: Investors buy and sell properties no matter where we are in the economic cycle.
Many of these niches can feed off one another. For example, working with investors can help you build REO or bankruptcy expertise because investors often target these properties. Also, networking with lawyers can help you get your foot in the door with divorcing clients or those holding an estate sale.
Lee Davenport, an agent and sales coach at Real Estate Bees in Atlanta, says she urges agents to focus on “Necessity Nicky” sellers—those for whom a home sale is unavoidable—when the real estate market slows. These clients may be going through a divorce, drastic change in household size, estate sale, layoff, foreclosure or relocation. Build referral partnerships with startup companies, coworking spaces, divorce attorneys, estate planners and local banks to generate new leads, Davenport suggests.
Presentation Is Key
If you’re ready to enter a new market, here are a few tips to start a new niche.
- Promote your new knowledge. When you add a subset focus to your business, don’t keep it a secret. Larsen says it’s important to add verbiage about your niche across all of your marketing materials, including e-signatures, website profiles, blogs and videos. Also, mention your niche whenever you connect with clients or other agents. Davenport suggests promoting information about your niche as additional resources in your marketing, which can also serve as part of your mission to support fair housing. “We do not market our additional resources to the exclusion of anyone else,” she says. An example, she adds, might be: “I can help you buy or sell homes, plus I have special resources if you are experiencing a divorce.”
- Offer freebies. Larsen offers listing agents a “revenue forecast” for their properties that they can share with buyers who may want to turn the home into a short-term rental. Larsen culls from data analytics companies such as Key Data, Wheelhouse, AirDNA and PriceLabs. Consider what information or data you can share with others about your niche that shows off your expertise and ultimately can help you generate referrals.
- Embrace professional tools. Find technology that can help you more easily operate your niche. Contact management systems may help you get organized by creating client databases, launching unique websites and tailoring your marketing to specific customer queries. Larsen relies on many tools to manage her short-term rental niche, including Jetstream, which has a 24/7 guest services portal that will respond to customer questions. This keeps her from getting bogged down with day-to-day property management, enabling her to focus more on working with her clients.
- Network. Attend industry conferences or those that relate to your niche to expand connections that could help feed extra business pipelines. Larsen suggests joining Business Network International, a referral networking group that caters to multiple industries. “I don’t view my colleagues as competition,” Larsen says. “We all have our clients and our lane. When we work together, we’re stronger. I’ve proven myself in this area. So, with other agents and brokerages, we can be a side team.” Other real estate professionals also can be a source of new leads for you if they know your niche.
“The interesting thing about all economic downturns is there are those that still succeed and even experience unprecedented success, despite those around them struggling,” Davenport says. “I have found the difference to be one’s mindset or focus.”